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how does one calculate goodwill by super profit method
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Answer / nagaraj
When the actual profit is more than the expected profit or
normal profit of a firm, it is called ‘Super Profit.’ Under
this method goodwill is to be calculate of on the following
manner:
Goodwill = Super Profit x Number of Years Purchase
CAPITAL EMPLOYED = Rs. 7,30,49,249
Financial Year Product
2006-07 2,60,40,742.63
2007-08 77,77,726.00
2008-09 1,34,84,208.75
2009-10 2,83,01,883.14
TOTAL 7,56,04,560.00
(Rounded off
Average Profit = Rs. 75604560 /4 = Rs. 1,89,01,140
Normal Profit = Rs. 7,30,49,249x 10/100 = Rs. 73,04,925
Super Profit = Actual/Average Profit - Normal Profit
Super Profit = Rs. 1,89,01,140-Rs. 73,04,925= Rs.
1,15,96,215
Goodwill = Rs. 1,15,96,215 x 3 = Rs. 3,47,88,645
| Is This Answer Correct ? | 36 Yes | 2 No |
Answer / shakir hussain
it can capsulated our work, it is small is size, we can
carry calculator to any where, it also so cheap,
you usually used in shop, or any place where a calcuation
is required,.
| Is This Answer Correct ? | 10 Yes | 19 No |
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Benjamin O'Henry has owned and operated O'Henry's Data Services since its beginning ten years ago. From all appearances, the business has prospered. In the past few years, you have become friends with O'Henry and his wife. Recently, O'Henry mentioned that he has lost his zest for the business and would consider selling it for the right price. You are interested in buying this business, and you obtain its most recent monthly unadjusted trial balance which follows: O'Henry's Data Services Unadjusted Trial Balance November 30, 20XX Cash……………………………… $9,700 Accounts receivable……………………… 7,900 Prepaid expenses………… 2,600 Furniture, fixtures, & equipment 151,300 Accumulated depreciation $15,600 Accounts payable………… 3,800 Salary payable……………… Unearned service revenue 6,700 Benjamin O'Henry, capital 137,400 Benjamin O'Henry, withdrawals 2,000 Service revenue………… 14,300 Rent expense…………… Salary expense………… 3,400 Utilities expense……… 900 Depreciation expense Supplies expense…… Total…………………………………………. $177,800 $177,800 Revenues and expenses vary little from month to month, and November is a typical month. Your investigation reveals that the unadjusted trial balance does not include the effects of monthly revenues of $2,100 and monthly expenses totaling $2,750. If you were to buy O'Henry's Data Services, you would hire a manager who would require a monthly salary of $3,000. The most you would pay for the business is 20 times the monthly net income you could expect to earn from it. Compute this possible price. The least O'Henry will take for the business is his ending capital. Compute this amount. Under these conditions, how much should you offer O'Henry? Give your reason. I have the mathimatical part ok , please give reasons on how much and why I they would offer him the amount.
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